Dendreon Misses Street Expectations, Plans Layoffs, Backs Away from Bullish Forecast
Dendreon is now more than a year into the product launch of its new prostate cancer drug, and it fell short of investors’ expectations today in a pretty big way. The company is now backing away from its 2011 sales forecast, and says it plans to cut expenses and make layoffs to cope with the slower-than-expected ramp up of sales.
The Seattle-based biotech company (NASDAQ: DNDN) said today it generated $49.6 million in revenues in the quarter that ended June 30. That’s quite a bit short of Wall Street expectations. Analysts were expecting a minimum of $55 million in sales during the quarter, said analyst David Miller of Biotech Stock Research. Miller said he was forecasting $52.7 million in sales for the quarter.
Dendreon won approval from the FDA to start selling sipuleucel-T (Provenge) in April 2010, as the first-of-its-kind treatment that stimulates a patient’s own immune system cells to fight prostate cancer like a virus. The company has been limited in its ability to sell the product by manufacturing constraints, although it has been adding new capacity. Dendreon has also been hemmed in by some uncertainty about insurance reimbursement, which was only resolved at the end of June, when Medicare determined it would fully reimburse doctors who prescribe the $93,000 product. The company has said previously it still expected to generate $350 million to $400 million in sales this calendar year, with most of the growth coming in the fourth quarter, but now it has backed away from that forecast. It didn’t offer a new forecast in today’s earnings report.
Now that Medicare has cleared up some of the uncertainty around reimbursement, Dendreon said it believes demand for the product will surge, but “we believe this will take time, and for the remainder of 2011, the launch trajectory will reflect a more gradual adoption of Provenge as physicians gain confidence in this positive reimbursement landscape,” said Mitch Gold, Dendreon’s CEO, in a statement. “With the number of infusion sites increasing substantially, our principal objective continues to be ensuring all eligible patients have access to Provenge.”
Dendreon plans to discuss the past quarter, and its outlook, on a conference call with analysts at 4:30 pm ET/1:30 pm PT today.